RWC likely boost for annual growth

The Rugby World Cup is expected to have played a major role in the country's economic growth in the three months ended December, but there are varying views on its impact.

Westpac economists are taking a bullish position, expecting a 0.8% rise in the quarterly GDP to give an annual economic growth figure of 2.4%.

ASB economists expect a 0.4% rise in the September GDP, propped up by RWC-related activity.

This week, Statistics New Zealand will release both the GDP and the current account deficit figures with the GDP figures taking the spotlight on Thursday.

Westpac chief economist Dominick Stephens said the RWC was likely to have been a modest positive for GDP overall, although with the benefits concentrated in a few areas such as hospitality, transport and tourism. There would have been some noticeable disruptions to other sectors.

"The clearest impact that we've seen is the sharp rise in retail spending in the third quarter. Given that much of the rise was concentrated in supermarkets, it's likely to have been driven by locals as well as visitors."

The other sector that was likely to have seen a strong boost was cultural and recreational services, which included the running of the tournament itself, he said.

Aside from the RWC effects, there was also a strong increase in manufacturing production, although this largely went into building up inventories while sales actually fell.

That was positive for output in the September quarter but could be a drag in later quarters if the stock build-up was involuntary - if firms were unable to find buyers.

The weakness in more recent manufacturing surveys suggested that might be the case, Mr Stephens said.

ASB chief economist Nick Tuffley said that beyond the impact of the world cup, the third-quarter GDP was probably weighed down by temporary dips in dairy and electricity prices, ongoing weakness in construction and falls in exports of manufactured and forestry goods.

"Looking through the volatility, and there will be a lot of it in the official statistics over the second half of 2011, we still see a gradual underlying recovery in place. However, the looming risk to the outlook is the euro zone situation which does threaten the momentum in New Zealand's export-led recovery."

The Reserve Bank would be more focused on the pace of underlying growth rather than the overall boost of the RWC, Mr Tuffley said.

On Wednesday, the current account figures are expected to show a further widening in September to 4% of GDP.

Softer commodity prices will affect the goods balance but it remain in positive territory.

Prices and volumes of exports are expected to be down in the quarter.